Over the past few weeks housebuilders' share prices have undergone a bit of a rollercoaster ride, following multi-year peaks at the end of last year.

All things considered the outlook should be positive for the sector given the scarcity of housing and the demand for property, however higher costs and concerns about a fall in property values in the event of a “Brexit” vote has served to limit the upside, and has prompted some significant declines in the last couple of weeks.

With house price inflation still running well above the level of inflation the order pipeline still looks fairly healthy unfortunately life is rarely that simple given recent tax changes to the upper end of the UK property market.

At the end of last year Berkeley Group announced pre-tax profits for the 6 month period to October 31st of £293.3m, on turnover of £1.1bn, at an average of £115,800 per property.

As the company gets set to announce its full year results later this week expectations have been slightly tempered by the slowdown in activity at the upper end of the property market, due to higher transaction taxes. This means pre-tax profits are expected to come in slightly below last year’s levels at £487m on revenues of £1.97bn, on the back of a decline in reservations, and higher costs.

There is also a skills shortage when it comes to tradesmen with bricklayers and carpenters in short supply, which means that house builders are having to pay up to push through completion rates, causing a certain amount of slippage when it comes to margins. A concern about the importation of these skills is also becoming a factor given the focus on immigration in the lead up to the June Brexit vote.  

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